The Participatory Economy

Veneck’s participatory economy: failure or success? Along the 20th century, numerous numbers of economic systems have been introduced. Most famously capitalism (Wilson L, 2008), beside other systems like communism, fasiaims and socialism. Actually Yugoslavia is the only country which experienced nearly all economic systems in addition to what so called the labour market economy (howord, 2001) which will give us an opportunity to make a contrast between venek’s participatory economy applied in Yugoslavia and the rest of the economic systems. The main idea of the participatory economy is based on emphasizing on the labours’ role in the economy. Workers were not considered as a factor of production, but actually the owners of factors of production throughout enterprises and corporations they worked in (Kennet 2004). This essay will express the participatory economy or in other words, labour market economy in terms of definition, objectives, and principles and mostly important the evaluation of the degree of success of the system. The essay will also express the performance of the participatory economy in reigns of venek and Tito who are the founders of the system (kalmi 2003). Veneck provided an economic system which is very exceptional. It was as previously stated a combination between socialism and capitalism. It took the participation of people in managing the economy as workers and through firms from capitalism (self-management 462). On the other hand, the idea of

equality between workers was socially based. What was very unique about veneck’s participatory economy is the period it showed up in. After the Vietnam war and the during the cold war period between capitalism and communism, people started looking for an intermediate system and veneck’s system was the strongest nominee (kalmi 2003) . It was then adopted by Tito in Yugoslavia who was one of the strongest supporters.

Generally speaking this type of managing the wealth of the economy has proved to be not so successful for many reasons which will be expressed throughout the essay. One of the evidence is that it didn’t last for long; it started officially in the 1950’s (Library of Congress Country Studies 1990) and ended by the end of the Yugoslavian state in 2003. Some attribute the failure of the labourmarket economic system to the way venek himself represented it (kalmi 2003). He was accused of being too eager to represent his idea and he refused any adjustment in the economic system. In other terms, not flexible. Another opinion expressed was calling for separating between the theory of venek and the way it was applied in the Yugoslavian economy. They actually attribute the failure to the way Yugoslavia adopted or applied the system. They actually applied it in only three institutions out of five main economic institutions. Besides, venek was very unrealistic expressing the predicted results. (Kennet 2004).this opinion seems much more

realistic and accurate as the performance of the economy does not depend on the degree it sticks to its economic ideology as much as it depends on the way of management of those in charge. One of the opinions regarding the failure of the participatory system is that venick went so theoretical rather than practical (kalmi 2003). He actually focused too much on the operation of the firms under the workers’ management and failed to provide an overview of the operation of the economy in all its microeconomic and macroeconomic aspect. This opinion is not very accurate as no economist or research can provide such vision on the performance of the economy and no one can provide such ideal figure. Others assumed that one of the major deficiencies in the participatory economy adopted by venick is that it lacked the link between firms (self-management 463). Firms might have been operating successfully, but the absence of link can be a huge deficiency in the economy. The participatory system has many objectives, but actually all these objectives can be summarized in two main issues; eliminating unemployment and focusing on the personal income rather than the total GDP. There aren’t really frequent statistics about the economy indicators in this period, but there are other important indicators (kalmi 2003). These objectives were great proof of the failure of the system as venek was very optimistic and he had to realise that this was not applicable. Maximizing the output of the enterprises weren’t the first concern, but the higher income of labour was (Kennet

2004). This can lead to less enthusiastic workers with very low output because they lack the incentive to produce. It is very clear that the venek’s economic model didn’t achieve the expressed objectives, but there are still benefits to be mentioned. The most important advantage is the relative satisfaction of a very wide class in the society who are the workers. Another important advantage is minimizing the friction between the government and workers as they have the most powerful situation in the economy (Kennet 2004). Decreasing the gap between the rich and the poor was also an effective advantage although some consider as a curse. After the end of the cold war by the defeat of communism and outstanding the capitalism, the world rejected any other system rather than capitalism including the participatory economy. The Yugoslavian economy went weaker and weaker. Inflation rate reached 42% in 2000 and the GDP per capita was $2,300 only, the purchasing power was also very low (World Fact Book 2001).Yugoslavia finally ended with its disintegration into Slovenia, Croatia, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia and Serbia also lost control over Kosovo (Western Intervention and the Disintegration of Yugoslavia 1999). Concluding, venek’s participatory was an economic system that raised many contra versions among economist. Most consider as a failure for debatable reasons. Some attribute the failure to the

ideology itself while others attribute it to the way veneck and Tito applied it in Yugoslavia. There are still advantages that were accompanied by the participatory system, but many consider that disadvantages were much higher. At the end, this will not stop economist from continuous searching for a better economic system provides the best allocation of resources.

References: 1) Horvat,B.(2001) “Self-Management and the Fall of Yugoslavia”

retrieved 2nd November from www.geonewsletter.org 2) Kennet D. (2004) “A new view of comparative economics” united states: Thomson. 3) Kalmi, P. (2003) “The Study of Co-operatives in Modern

Economics: A Methodological Essay” retrieved 2nd November from web.uvic.ca/bcics/pdf/mapconf/Kalmi.pdf. 4) Kornail (1971) Self-management, chapter 20. 5) “Western Intervention and the Disintegration of Yugoslavia”,

retrieved 2nd November from www.davidchandler.org 6) Wilson, L .(2008) “FREEDOM AND CAPITALISM”, retrieved 2nd

November from www.drlwilson.com 7) “Yugoslavia economy” (2001), CIA world fact book, retrieved

at 2nd November from www.geographic.org.